Realtor.org reported Tuesday that Pending Home Sales moved higher in December 2008. Actual home sales moving higher would surely make for better news – but pending sales – those which involve home sunder contract to sell but have not yet closed – will do for now.
The folks over at Realtor.org set up the Pending Home Sales report as a harbinger of future activity, suggesting that home sales will spike 60 days from now.
Of course, predictions are worth about as much as the crystal ball in which they appear. This said, it’s still a bit of good news for the economy.
However, despite the Pending Home Sales report’s supposed ability to predict the actual number of homes we’ll see as sold in the future, that connection may not be the report’s best use.
Why, you ask? Well – mainly because of what the Pending Homes Sales Report doesn’t measure.
- Image via Wikipedia
Specifically not included in Pending Homes Sales Report is data related to:
- Sales of new construction homes
- Sales of For Sale By Owner properties
- 80 percent of non-surveyed Multiple Listing Service (MLS) transactions
We need to remember that Pending Home Sales tracks contracts — not closed deals — and we all know that a deal ain’t done till the contract is signed. Until then, these number really do amount to a fancy form of conjecture.
Pending Home Sales still has its place, though, because for what it lacks in providing certainty – it makes up for by giving us one heck of a great peek into present-day buyer-side demand for homes.
Clearly, low mortgage rates and falling home prices are making an impact, which is why the December’s Pending Home Sales report is so important. It’s the third housing report this month that shows the demand for homes rising while the supply of homes falls.
The other two reports:
- The number of “used” homes sold monthly is rising
- The number of new homes being built are falling
Me thinks we like what we see here, no? I mean hey – this is good news for home sellers and for the economy, right?
Related Articles of Interest
- Rise in Pending Home Sales Reported (nytimes.com)
- January’s hottest real estate news (lansner.freedomblogging.com)
- US home sales see surprise rise (news.bbc.co.uk)
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